Key Takeaways
- • Downing Fund Managers has launched the MGTS Downing Active Defined Return Assets Fund, the first product from its newly established Liquid Alternatives team, targeting institutional investors and discretionary fund managers.
- • The fund aims to deliver 7% to 10%+ per annum with positive returns in all markets except sustained equity declines exceeding 35%, utilizing a hybrid strategy combining UK Government bonds, large-cap equity index options, and systematic derivative strategies.
- • The fund is positioned as a multi-asset portfolio building block offering consistent, predictable returns with strong liquidity and scalability, backed by a team with over 125 years of collective experience including former senior executives from BlackRock, Atlantic House Group, Santander Asset Management, and Royal Bank of Canada.
- • The investment approach combines systematic liquid derivatives with active management to optimize equity risk-return profiles while maintaining portfolio diversification across large liquid indices and multiple counterparties.
Summary
Downing Fund Managers has unveiled its first liquid alternatives offering through a newly formed Liquid Alternatives team. The MGTS Downing Active Defined Return Assets Fund represents a strategic expansion into the active alternatives space, targeting institutional investors, Discretionary Fund Managers, IFAs, and sophisticated individual investors seeking reliable return drivers for multi-asset portfolios.
The fund's investment mandate centers on delivering 7% to 10%+ per annum with positive returns across most market conditions over a minimum six-year investment horizon. The strategy will primarily utilize UK Government bonds paired with large-cap equity index options to construct the core portfolio, supplemented by systematic derivative strategies designed to enhance risk-adjusted returns. This hybrid approach combines the stability of fixed-income securities with the upside potential of equity derivatives, offering what Downing characterizes as an "equity-like risk profile" with more predictable outcomes.
The fund's defensive positioning is notable: it targets positive returns in all market scenarios except for sustained equity market declines exceeding 35%, positioning it as a portfolio stabilizer rather than a high-beta alternative strategy. Risk components are deliberately diversified across multiple large liquid equity indices, observation levels, and counterparties to minimize concentration risk and operational counterparty exposure.
The Liquid Alternatives team assembled by Downing brings significant industry credentials. Leadership includes Tony Stenning, formerly CEO of Atlantic House Group with prior senior roles at BlackRock; Russell Catley, Atlantic House Group founder and former CEO; Huw Price, ex-Executive Director at Santander Asset Management; and Paul Adams, former Head of Cash Equities and Derivatives Sales at Royal Bank of Canada. Collectively, the team brings over 125 years of sector experience, suggesting institutional-grade investment infrastructure and risk management capabilities.
The fund addresses a growing institutional demand for liquid alternatives that provide diversification benefits without sacrificing accessibility or liquidity. By combining systematic derivatives with active management and anchoring the portfolio to highly liquid instruments, Downing is offering what it frames as a predictable, scalable building block for multi-asset allocators seeking returns independent of traditional equity and bond beta.
The fund's investment mandate centers on delivering 7% to 10%+ per annum with positive returns across most market conditions over a minimum six-year investment horizon. The strategy will primarily utilize UK Government bonds paired with large-cap equity index options to construct the core portfolio, supplemented by systematic derivative strategies designed to enhance risk-adjusted returns. This hybrid approach combines the stability of fixed-income securities with the upside potential of equity derivatives, offering what Downing characterizes as an "equity-like risk profile" with more predictable outcomes.
The fund's defensive positioning is notable: it targets positive returns in all market scenarios except for sustained equity market declines exceeding 35%, positioning it as a portfolio stabilizer rather than a high-beta alternative strategy. Risk components are deliberately diversified across multiple large liquid equity indices, observation levels, and counterparties to minimize concentration risk and operational counterparty exposure.
The Liquid Alternatives team assembled by Downing brings significant industry credentials. Leadership includes Tony Stenning, formerly CEO of Atlantic House Group with prior senior roles at BlackRock; Russell Catley, Atlantic House Group founder and former CEO; Huw Price, ex-Executive Director at Santander Asset Management; and Paul Adams, former Head of Cash Equities and Derivatives Sales at Royal Bank of Canada. Collectively, the team brings over 125 years of sector experience, suggesting institutional-grade investment infrastructure and risk management capabilities.
The fund addresses a growing institutional demand for liquid alternatives that provide diversification benefits without sacrificing accessibility or liquidity. By combining systematic derivatives with active management and anchoring the portfolio to highly liquid instruments, Downing is offering what it frames as a predictable, scalable building block for multi-asset allocators seeking returns independent of traditional equity and bond beta.
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